Developing nonpofit management trust

Trustee Responds to Charge of Being Willfully Blind or Incompetent!

By Eugene Fram

The organization in which Andrew Purkis served as a trustee had been dissolved. Purkis and his colleagues were cited as “…willfully blind or incompetent.” * Such strongly negative pronouncements inspired him to write an essay in which he listed four reasons why his British group had been unsuccessful in exercising their oversight responsibilities.

A review of his rationale provides some fodder for American nonprofit directors/trustees to consider the reasons that led to his organization’s downfall– and more importantly, to assess their own board strengths and vulnerabilities. The following, in my opinion, are areas that have relevance to the Purkis exposition.
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Beyond the Bylaws: A Clarification of Nonprofit Board Responsibilities–Revised and Updated

By: Eugene Fram

A nonprofit director’s duties may be much more difficult than those of a for-profit board member. Both types of directors have the same basic duties: fiduciary responsibilities; establishing, with staff input, mission vision and values; setting policies/strategies; over-viewing outcomes/impacts and conducting annual meetings.

I suggest nonprofit directors may not be fully addressing some duties specified in the bylaws and some which are culturally driven. This latter group might be called “latent duties.” (more…)

Radio Program Tomorrow–March 11th.

You may find this radio program in which I am interviewed of interest.

http://tonymartignetti.com/2016/03/nonprofit-radio-march-11-2016-policy-vs-paper-clips/?utm_campaign=shareaholic&utm_medium=twitter&utm_source=socialnetwork

Do Nonprofit Boards Neglect Oversight of Internal Leadership Development?

By: Eugene Fram

Although the nonprofit CEO is charged with nurturing the development of his/h staff, the board is responsible for over-viewing the process. Research evidence shows both board and management are neglecting their duties in regard to this responsibility. Only 30% of nonprofit CEO positions are filled internally, a rate that is about half the rate of for-profit organizations. * The same research shows that, “Hiring the more (internal personnel) can improve performance at the two-year mark by 30%.” These data are even more troubling when roughly related to those of large corporations that concluded that 40% of those hired from outside the organizations are replaced within 18 months. **

Why Are Nonprofit Boards Not Paying Enough Attention?

• Board Turnover: The most common board structure is two consecutive 3-year terms. Board chairs most commonly serve two consecutive 1-year terms. This in itself can easily create a “short term” board culture. Board members and chairs know they have relatively short tenures and may want to take actions that show more immediate results. Leadership development can be the antithesis of such actions. It takes time and nurturing.

• The Board-CEO Relationship: Nonprofit boards, as conservators of the organizations assets, are often hesitant to remove an incumbent CEO, sometimes, even when the person has been involved with nefarious activities. Consequently, many nonprofit CEOs are what I call “mind-the-store” types. They have small growth percentages each year, have their financial processes in order, but fail to have competent subordinates who are capable of promotion. As a result, those board members who want to establish a culture for leadership growth have to wait for the incumbent CEO to leave or retire. Most board members, as volunteers, fear the interpersonal conflict and added time commitment that follows a board initiated CEO termination. As a result, all plans for change, such as leadership development, can’t thrive without the active support of the CEO.

• The CEO’s Comfort Zone: Few, if any nonprofit CEOs I have encountered take pride in reporting that some of their direct or indirect subordinates have left for substantial success elsewhere. Many currently who have risen in the organization from a line position have had to acquire newer management skills. Consequently, less qualified incumbent CEOs may view more able but less experienced subordinates as a career threat, and they have little interest in promoting leadership development.

Moving Leadership Development Into a Nonprofit Culture

A board member who serves for six years can have some opportunities to introduce leadership development into a nonprofit organization’s culture:

• When Interviewing A CEO Candidate: Ask about leadership development in prior jobs. Ask the candidate about his/h most outstanding direct report and the most problematic one. Look for answers relating to pride in developing subordinates and for engaging able younger managers
throughout the organization. Also ask references about these issues.

• A New Strategic Plan: Have the board agree with the CEO that leadership development is critical at all levels and establish some modest mutual objectives to begin the process of introducing a new strategic plan.

• When The Lack of a Process Affects the Nonprofit’s Impacts: Establish leadership development as a major CEO objective to be accomplished within a reasonable time frame. Seek a new CEO, if the person fails to perform.

Younger people often seek careers in nonprofit organizations because they want to contribute to the lives of others or to the social welfare of the greater community. After some years of direct service experience, some may discover they have leadership potential. Without a leadership development culture, nonprofits will lose these able persons to the for-profit sector, for better financial rewards, or find they will become staff persons who do their job adequately but look other outside activities, like political office, to satisfy their leadership ambitions.

* http://hbr.org/2015/12/nonprofits-cant-keep-ignoring-talent-development
** Ibid.

Can Groupthink Hamstring Change on a Nonprofit Board?

By: Eugene Fram

Dictionaries typically define groupthink as “…the lack of individual creativity, or a sense of personal responsibility that is sometimes characteristic of group interaction.” In my opinion, the process is as lethal to the nonprofit board as smoking can be for humans. It ties boards to past experience and discourages experimentation. Since many nonprofit charters require boards to “conserve assets” and board members are characteristically volunteers, the nonprofit culture inevitably defers to groupthink–it’s in their DNA! “One goes along to get along.”
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What Role Should Directors Play in Overviewing Nonprofit Management/Staff Talent?

What Role Should Directors Play in Over-viewing Nonprofit Management/Staff Talent?

Nonprofit boards rarely develop an in-depth strategy for assessing its organization’s human capitol. Some will keep informal tabs on the CEO’s direct reports to prepare for the possibility of his/her sudden departure or is incapacitated. Others –smaller organizations with fewer than 20 employees—need only a basic plan for such an occurrence.

Need for Strategy: In my view, maintaining a viable talent strategy to assess staff and management personnel is a board responsibility, albeit one that is often ignored. The latter stems from the constant turnover of nonprofit directors whose median term of service is 4 years—hardly a lifetime commitment. Like for-profit directors whose focus is on quarterly earning results, their nonprofit counterparts are more interested in resolving current problems than in building sufficient bench strength for the organization’s long-term sustainability. (more…)

The Devil’s Advocate on a Nonprofit Board: Asset or Liability?

By: Eugene Fram

An unwritten rule for nonprofit board membership is that it is best to “go along to get along.” But sometimes a nonprofit director’s “no” vote to an action that has had inadequate discussion can allow him/h to avoid tax penalties that have been levied on other board members for lack of due care.

Stanford University research results indicate that groups with a lone minority dissenter outperform other groups where all members agree. In addition, these groups…”are more successful than (groups) in which all members disagree and fall prey to escalated emotional, difficult-to resolve (group) brawls “ * (more…)

Can Nonprofit Boards Learn from the Recent Carnegie Hall Disruption?

By: Eugene Fram

The costly upheaval between Carnegie Hall board and staff appears to be slowly moving toward resolution. * But, for decades, other types of large nonprofit organizations have imperfectly resolved the issues that have arisen at Carnegie Hall without similar spectacles. Examples: university boards know they have to fully rely on faculty to develop up-to-date curricula. Hospital boards know they have to retain skilled physicians or face the potential of due care failure liabilities.

I suggest that nonprofit directors need to consider three actions to help eliminate the type of spectacle recently evidenced by the Carnegie Hall organization. (more…)

Board Members: Does Your Nonprofit Know How To Engage Business Donors?

By: Eugene Fram

Fund development should be a partnership between board members and CEOs/Development Officers, if the latter is available. However, I have noted that board members don’t take sufficient responsibility to make certain that CEOs and Development directors are well prepared when they approach potential business donors. This, in my view, is the first step in building a relationship fundraising approach.

Many involved with NFP fundraising or management have spent their entire careers in the nonprofit environment, resulting in a gap in communicating with those in the business environment. Some may even privately believe that those in business contribute less significantly to society. While little can be done about the latter, here is what I think can be done to fill or reduce the unfortunate gap in cultures often found between for-profits and nonprofits, especially when it relates to fund development. (more…)

Measuring Nonprofits’ Impacts: A Necessary Process for the 21st Century

By Eugene Fram

Nonprofit boards and CEOs in the United States are being overwhelmed with requests from foundations and governmental agencies to move from providing outcome data to providing impact data. One nonprofit with which I am well acquainted has been required to reform its IT program to meet the requirements of a local governmental IT program, so that impacts can be assessed. It will be interesting to see how this scenario plays out.

Unfortunately, outcomes and impact are often unrelated, which is why a program that seems to produce better outcomes may create no impact at all. Worse, sometimes they point in opposite directions, as can happen when a program works with harder-to- service populations resulting in seemingly worse conditions, but (has) higher value-added impact. … Rigorous evaluations can measure impact (to a level of statistical accuracy), but they are usually costly (a nonstarter for many nonprofit), difficult and slow. * But how do the medium and small size nonprofits measure actual results in the outside world such as enhanced quality of life, elevated artistic sensitivity and community commitment?

A Compromise Solution:

To close the gap, funders and recipients would need to agree to apply imperfect metrics over time. These are metrics that can be anecdotal, subjective or interpretative. Also they may rely on small samples, uncontrolled situational factors, or they cannot be precisely replicated. ** This would require agreement and trust between funders and recipients as to what level of imprecision can be accepted and perhaps be improved, to assess impacts. It is an experimental approach

How To Get to Impact Assessment:

1. Agree on relevant impacts: Metrics should be used to reflect organizational related impacts, not activities or efforts. Impacts should focus on a desired change in the nonprofit’s universe, rather than a set of process activities.
2. Agree on measurement approaches: These can range from personal interviews to comparisons of local results with national data.
3. Agree on specific indicators: Outside of available data, such as financial results, and membership numbers, nonprofits should designate behavioral impacts for clients should achieve. Do not add other indicators because they are easily developed or “would be interesting to examine.” Keep the focus on the agreed-upon behavioral outcomes.
4. Agree on judgment rules: Board and management need to agree at the outset upon the metric numbers for each specific indicator that contributes to the desired strategic objective. The rules can also specify values that are “too high” as well as “too low.”
5. Compare measurement outcomes with judgment rules to determine organizational impact: Determine how may specific program objectives have reached impact levels to assess whether or not the organization’s strategic impacts have been achieved.

Lean Experimentation

The five-point process described above closely follows the philosophy of lean experimentation, *** now suggested for profit making and nonprofit organizations.

Lean allows nonprofits to use imperfect metrics to obtain impact data from constituents/ stakeholders over time. Under a lean approach, as long as the organizations garners some positive insights after each iteration, it continues to improve the measurement venues and becomes more comfortable with the advantages and limitations of using these metrics.

Organizationally the nonprofit can use this process to drive change over time by better understanding what is behind the imperfect metrics, especially when a small sample can yield substantial insights, and actually improve the use of the metrics.

* http://ssir.org/articles/entry/the_promise_and_peril_of_an_outcomes_mindset
** https://nonprofitquarterly.org/2012/07/24/using-imperfect-metrics-well-tracking-progress-and-driving-change/
*** http://ssir.org/articles/entry/the_promise_of_lean_experimentation

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